TORONTO (miningweekly.com) – Vancouver-based Creston Moly has completed a prefeasibility study on its flagship Creston project, in Sonora, Mexico, and will move ahead with a bankable feasibility study, albeit “in a measured and cash conservative manner”, the firm said on Wednesday.

Based on the prefeasibility report, Creston Moly expects it could produce 20-million pounds of molybdenum and 12-million pounds of copper a year, from 40 000 t/d of ore.

However, prices for both metals have fallen off steeply as global economic activity declines, which, coupled with hard-to-access financial markets, may make the project difficult to finance.

“While in the short term, it remains a challenge to acquire adequate financing for good mining projects, this will change,” said chairperson Colin Benner.

“We remain confident that the Creston project is one of the most viable primary molybdenum projects in the Americas and we want the project poised to take full advantage of the healthier base-metals markets when they arrive."

The study includes scenarios for both contractor and owner mining, and the company has yet to decide between the two, Creston said.

If it opts to do the mining itself, capital costs are estimated at $576,2-million, but the figure declines to $511,6-million if a contractor is used.

The Creston operation has been planned as a conventional openpit mining operation, with an average stripping ratio of 1,23:1 over the life-of-mine.

The average grade processed for the life-of-mine is estimated at 0,077% molybdenum, although it will be higher, at an average of 0,088% moly, during the first five years of operation.

The project will produce 219-million pounds of molybdenum and 129-million pounds of copper over an 11-year mine life.

Direct costs, including copper byproduct credits, are estimated at $6,57/lb of molybdenum equivalent with contractor mining, and $5,74/lb with owner mining, based on a price outlook of $15/lb for moly and $1,75/lb for copper.

However, M3 Engineering & Technology, which conducted the study, noted that there is potential to improve the economics of the project by increasing the overall resource, buying used equipment and by taking advantage of declining costs for things like construction materials and fuel.

The Creston deposit contains proven and probable reserves of 249,95-million pounds of molybdenum and 158,83-million pounds of copper, at a 0,035% moly-equivalent cutoff grade.

Measured and indicated resources are estimated at 278,21-million pounds of molybdenum and 179,14-million pounds of copper.

Shares in TSX Venture Exchange-listed Creston Moly rose 9,1% on Wednesday morning, to C$0,12 apiece by 10:16 in Toronto.

Also on Wednesday, molybdenum producer Thompson Creek metals announced details of its plans to reduce production and curtail spending this year, while the biggest producer of the metal, Freeport-McMoRan Copper & Gold has said it will reduce underground mine production at its Henderson operation by 25%, curtail the molybdenum circuit at the Cerro Verde mine, in Peru, and defer the restart of the Climax molybdenum mine.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.